Daily Analysis GBPUSD - 31 July 2023

The GBP/USD experienced a sharp decline due to the overall strength of the US Dollar. This was triggered by investors reevaluating the Federal Reserve's policy outlook following the release of robust macroeconomic data.

In the second quarter, the US Real Gross Domestic Product (GDP) expanded at an annual rate of 2.4%, surpassing market expectations of 1.8%. Additionally, there were positive developments with weekly Initial Jobless Claims decreasing to 221,000 and Durable Goods Orders increasing by 4.7% monthly in June, far exceeding analysts' estimate of 1%.

As a result of the 25-basis points rate hike on Wednesday, there is growing uncertainty in the markets about whether the Fed has reached its terminal rate. This uncertainty has propelled the US Dollar to outperform other currencies as we head into the weekend.

The GBP/USD is currently recovering from the 1.2750 level, but for any discussion of a new positive trend in GBPUSD, a breakout above the key 1.3000 round number is necessary. Meanwhile, the EUR/USD's bullish long channel could face a challenging shift in sentiment, potentially resulting in a retracement back towards the levels witnessed in May and June.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.3220	1.3150	1.3000	1.2800	1.2750	1.2650